CHAPTER 10 Could Existential Stimulus Fail?
Consider the drama that played out in the fall of 2008. With the US economy in freefall and the banking system on the brink of collapse, the Bush administration put the Troubled Asset Relief Program (TARP), a $700 billion stimulus package, before Congress. It was voted down, and markets plummeted (see figure 10.1), with the broad stock index dropping 3% within 10 minutes and 9% on the day. The US economy had come to its most perilous moment since the Great Depression, a dramatic demonstration of systemic risk to politicians.
Having been punished by the markets, Congress soon changed its mind and passed TARP, and in the prior chapter we presented those measures as a qualified success in the history ...
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